Tough reform from the Coalition playbook

Despite confected howls of indignation from the Opposition and the labour movement, the Abbott Government’s mooted Productivity Commission inquiry into workplace laws is an election promise kept, not broken.

The PC inquiry was foreshadowed prior to the 2013 federal election, partly to placate those in the business community and media clamouring for IR reform. But it’s also part of a bold plan to take WorkChoices Mk II to the 2016 federal election and secure the people’s mandate in order to deliver what the business community wants.

Not that the Coalition’s new IR policy will be called any such thing – for WorkChoices is dead, buried AND cremated. Abbott’s campaign to make WorkChoices-by-another-name electorally palatable will closely follow the blueprint created by his mentor, John Howard, when he successfully took the GST to the 1998 federal election, paving the way for the tax to be established in July 2000.

Keeping in mind that, following John Hewson’s humiliating loss to the unpopular Paul Keating in 1993 predominantly because of the GST, and that he himself had vowed to never, ever propose a GST, Howard didn’t just plonk it on the table during the election campaign and ask voters to trust him. Instead he spent more than a year preparing the ground and shaping voters’ expectations to ensure the new tax had the best chance of success at the ballot.

To counter its rocky past and reputation as a partisan plaything, the GST was first considered and then recommended by a taxation taskforce established by the government to prepare options for tax reform. (Said taskforce was chaired by Treasury official and former Keating staffer, Ken Henry).

Exactly one year after establishing that taskforce, Howard’s treasurer Peter Costello presented voters with a package of tax reforms that included not only a GST but also personal income tax cuts, an increase in the tax free threshold and pensions, and the scrapping of wholesale sales tax, as well as the elimination of nine other taxes imposed at the state and territory level. Then the government blitzed voters with a controversial advertising campaign before immediately plunging the nation into a moderately early federal election.

Abbott is wise to be treating industrial relations reform as carefully as Howard did the GST. While he hasn’t explicitly gone back on an undertaking in the way Howard did, Abbott will be subject to that accusation right up until the next federal election and it has a good chance of getting traction.

Like Howard, Abbott is trying to create a sense of vision, momentum and inevitability around a vexed policy that obliterated one of his predecessors. Instead of sending it to a bureaucratic taskforce, Abbott has chosen to launder the policy by sending it to the economically dry (and therefore reasonably predictable) Productivity Commission, which will simultaneously bestow a sheen of objectivity on the essentially predetermined recommendations to urgently reform Australia’s workplace laws.

The media scandals and union angst generated by the Royal Commission into union governance and corruption are intended to build complementary support in the general community for Something To Be Done and soften resistance to the Government reigning in union power. This should create a favourable environment for the PC recommendations to be handed down in April next year, leaving a year for the government to release its workplace relations policy in response and perhaps run a controversial advertising campaign before calling the 2016 election.

It’s a matter of record that Howard narrowly won the GST election, securing less than 50 per cent of the vote and shrinking his majority from 40 seats to 12. Less certain is whether the GST dragged Howard down or propped him up.

At this early stage it’s equally difficult to determine whether IR reform will be a bane or bonus for Abbott. He has only a majority of 30 seats and consequently less scope for failure than Howard.*

The key is likely a rarely discussed element of the successful GST campaign. Political scholar Richard Eccleston pointed out that particularly influential opponents of the GST in the 1993 election – namely welfare advocates – joined with the business community after the regressive indirect tax increases announced in Keating’s 1993-94 budget in 1996 to find common tax reform objectives. These ultimately included agreement that a low rate, broad-based consumption tax should be part of a wide tax reform package. According to Eccleston:

A combination of changing economic conditions, the Keating government’s consequent deceit in relation to indirect taxation, and the disciplined promotion of the need for reform by the welfare-business coalition from 1996 convinced a majority of voters that indirect tax reform was necessary.

Abbott is going to need a similar convergence of traditionally disparate interests to get his IR reforms across the line in 2016. He’ll need to bring workers and employers together to support workplace reform in the same way that ACOSS and ACCI jointly supported tax reform in 1996. Demonising the union movement and creating a common “foe” for employees and bosses appears to be the chosen way.

Yet 55 per cent of Australians say they’re concerned about job security, 61 per cent think unions are important, and 45 per cent say workers are better off with stronger unions. So it will be interesting to see how Abbott fares with the IR reforms he is prepared to make during this parliamentary term.

The Government introduced legislation last month to implement the Coalition’s Fair Work Laws election policy. The bill aims to amend the Fair Work Act to tighten right-of-entry rules for unions, allow employees to trade penalty rates for more flexible hours and close “strike first, talk later” loopholes.

Of course that won’t occur any time soon because the legislation won’t be passed by the current Senate. Instead the legislation is little more than a platform upon which the parties, unions and employer groups can continue to wage their industrial relations battle.

Abbott and his Employment Minister Eric Abetz may have introduced the legislation purely to create this opportunity to further denigrate unions in the eyes of the public. But if voter sympathy for the labour movement is generated instead, Abbott’s bold plan may well be dashed before it’s even really under way.